Spring training brings excitement, economic boost to Valley, says ASU business professor
Spring has sprung, the grass has grown and professional baseball’s back in biz.
After a worldwide pandemic and a player lockout, the Cactus League is returning to metro Phoenix for the first full season since 2020. The league has been a seasonal rite of spring since 1947 and attracts fans from around the country. The season began on Feb. 24 and runs through March 25.
Municipalities, business leaders and tourism officials are also fans of the game as it provides an economic boost to Valley cities.
Daniel Marburger, an economics professor with Arizona State University's W. P. Carey School of Business, has been studying the impact of the Cactus League for years. He said this year’s return of the league is not only a windfall for the metro area but a good sign that society is returning to tradition.
ASU News spoke to Marburger on the financial aspects of the Cactus League and why it’s an integral part of the Valley’s tourism economy.
Question: In 2018, the W. P. Carey School wrote a paper on the economic impact of spring training on the Valley of the Sun. What are your expectations this year?
Answer: The economic impact estimate in the 2018 study was $373 million. I did a back-of-the-envelope analysis of monthly sales tax revenues in Scottsdale over the past several years to infer the impact of spring training throughout the Valley. This won’t reflect the entire economic impact because half of the Cactus League teams are on the western side of the city. Nevertheless, sales tax revenues in Scottsdale were 12% higher in March of 2022 than in March of 2018. Not all of that was associated with spring training, but my guesstimate is that the economic impact this year will be at least 10% higher than in 2018.
Q: Do you believe the Cactus League has or will recover from the pandemic?
A: People may forget how dramatically the pandemic hit the U.S. in 2020. ASU had just begun its spring break. There was no hint that we might not be back in class the following week. But then everything happened. In a few days, the NBA postponed its season, the NHL postponed its season, March Madness was canceled, the remaining spring training games were canceled and ASU went online. I opined earlier that week that canceling the remaining games would be small, given that most visitors were already here and would continue to golf, go to restaurants, etc. But pretty much everything started shutting down. Scottsdale sales tax revenue, instead of increasing in March, decreased by $3 million.
The good news is that Scottsdale sales tax revenue was higher in March of 2022 than in previous years, leading me to believe that people are ready to return to the ballparks throughout the Valley.
Q: What are the economic impacts of the Cactus League outside of baseball?
A: Economic impact studies are limited to out-of-state visitors. Residents may attend baseball games and spend money locally, but they would still spend their money locally even if the Cactus League did not exist. Unsurprisingly, out-of-state visitors' largest categories of expenditures are bars, restaurants and accommodations. Beyond that, visitors also spend money on retail, transportation and other sources of entertainment. According to the ASU study, the average out-of-state party spends $1,860 during its stay, which averages four nights.
Q: You compile a lot of your information through a survey. What’s the most interesting detail that comes to mind?
A: The most important finding in the ASU economic impact study is that two-thirds of the out-of-state patrons surveyed stated that spring training was the sole or primary reason they visited Arizona. If the primary reason to visit Arizona was to escape the harsh northern winter for a week, and they happened to catch a game or two, you couldn’t attribute their spending to the Cactus League because they would have vacationed here anyway.
This is especially important to Arizona because Florida also has the lure of spring training for northern residents. How many Chicago Cubs fans would travel to Florida instead of Arizona if the Cubs trained there instead of in Mesa?
Another significant finding is that over half of those attending spring training games reside outside of Arizona. As I said earlier, economic impact studies do not include residents. But if more than half of those in attendance at games are from out of state, most of whom came here specifically to see spring training games, you can infer a significant impact on Arizona and the Phoenix area specifically.
Q: Since many of these baseball stadiums get only a month of use during the year, do they likely offer a return on investment for Valley cities?
A: Answering that question would require a sophisticated capital budgeting analysis. So here’s another back-of-the-envelope estimate. Salt River Fields and Sloan Park were each constructed for $100 million. Assume for purposes of analysis that each has a 20-year life. Suppose each stadium was funded by city bonds that paid 2%. Let’s also suppose that each ballpark is responsible for precisely 10% of the estimated $373 million economic impact, or $37.3 million per ballpark per year. Ignoring inflation and real growth in spending over the years, the average ballpark would generate a net positive investment of $500 million to Arizona over 20 years.
Q: Will the Cactus League continue to be a solid investment for the Valley in years to come?
A: Yes, with a few caveats. Part of the lure of the Cactus League is the beautiful weather we enjoy in Arizona when most of the country is still in the throes of winter. If a northern city were to read the ASU impact study and decide to invest in spring training facilities, it would not likely obtain similar results.
I should also note that economists invariably state that the economic impact of sports franchises and stadiums is much less than most people think. I’m guessing that if Glendale were to do it all over again, it would not have funded the Gila River Arena. Going back to my simplified capital budgeting analysis, if a $100 million-facility generates a net positive impact of $500 million over 20 years, a $700 million-facility would drain the local economy. Cities must avoid the temptation to engage in bidding wars that ultimately do not make financial sense.
Finally, a unique aspect of the Cactus League is that it’s a collection of 15 teams from around the country, thereby drawing out-of-state visitors from all over the country. Rockies fans are not limited to attending games at Salt River Fields; they may venture to any of the 10 ballparks to see their team play. This implies spillover benefits across the Valley.
Top photo by Cindy Jones, courtesy Pixabay